Gov. Wilson: Keep Net taxes simple, low

The California governor agrees with a report from his advisory panel on Internet taxation.

3 January 200212:43 am GMT

MOUNTAIN VIEW, CALIFORNIA--With the clock ticking down on the
three-year moratorium on Internet taxes, California Gov. Pete Wilson today
urged federal and state lawmakers to keep taxes on Internet transactions
simple, not duplicative, and low.

He also agreed with the recommendation of his Electronic Commerce
Advisory Panel that Internet access
charges should not be taxed even when the tax moratorium, passed by
Congress earlier this year, expires in the year 2001.

"Our goal is stimulating e-commerce and preventing unwise regulation and
taxation of e-commerce," Wilson said today after accepting the advisory
group's report and signing an executive order tell state departments to
expedite its implementation. The lame-duck Republican and said he would
urge his successor as governor, Democrat Gray Davis, to give the report his
early attention.

"My guess is that he will accept it eagerly," Wilson said.

Besides its tax recommendation, the report also addressed privacy and
Consumer-protection issues, in both cases calling for no new regulations.
But it did urge other states and the federal government to adopt anti-spam
laws that California has already implemented..

Michael Boskin, a Stanford University economist who chaired the panel's taxation
committee, outlined principles for taxing
Internet transactions. Taxes should be neutral on how an item is sold,
simple and easy to implement, and set nationally at as low a rate as
possible.

Congressional leaders have appointed a number of Internet executives to an
advisory group drafting rules on Internet taxes, which is due to report
before the current moratorium expires. However, they are reportedly
rethinking some appointments after complaints that the blue-ribbon panel
is stacked in favor of the Internet industry.

The panel made a number of other recommendations that could prove
controversial. For example, it urged a single, streamlined tax system not
only for Internet sales but also for mail order, telemarketing, and TV home
shopping. In the past, catalog and telemarketing firms have fought hard
against having their transactions taxed.

In addition, the report raises the novel notion that digital goods of all
kinds--software and music principally--might be exempt from sales taxes.
Arguing fairness, it suggests all software might go untaxed if 35 percent
of software is delivered electronically. Electronic delivery is not taxed
in California, violating the principle of neutrality if substantial sales
are delivered online.

Other parts of the report urge:

Letting the Federal Trade
Commission continue to handle complaints that Web sites don't live up
to their posted privacy policies.

Applying online privacy rules to the physical world and other media
too.